Intelligent SME.tech Issue 51 | Page 21

// EDITOR ’ S QUESTION //

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T he economic backdrop as we enter 2025 , formulated by global pressures and policy developments , presents several headaches for management teams due to rising operational costs . Inflation is projected to stabilise but will have a longterm effect on profitability .

Notably , SME insolvencies have risen , which tend to show their vulnerability during periods of economic uncertainty . Such pressures highlight the importance of strategic planning for business resilience in the changing market .
The impact of regulatory changes
The new UK legislation will dramatically affect how SMEs do business in 2025 . The Employment Rights Bill and sections of the Digital Markets , Competition and Consumers Act mean businesses will have to move fast to become compliant . While these moves are meant to protect workers and consumers , they might raise administrative and operational costs . The stricter penalties for noncompliance go up to heavy fines , raising the bar on ensuring SMEs are regulatory-ready .
Meanwhile , cybersecurity threats are still highly relevant : in 2024 , 50 % of the businesses in the UK reported a cybersecurity breach within the last year , underlining the crucial need for investment in digital protection .
Opportunities for growth
Business owners breathed a sigh of relief following the Autumn Budget in the UK as gloomy predictions about sizeable hikes in the Capital Gains Tax rates proved to be far worse than what was ultimately announced by the Chancellor of the Exchequer , Rachel Reeves . Tax incentives for research and development , alongside government support for highgrowth sectors like technology and renewable energy , create the groundwork for innovation and expansion .
Harnessing technology for competitive advantage
Technology remains one of the major determinants in the performance of SMEs . Firms embracing digitisation tend to fare better than their contemporaries by using innovation to leverage their operations and customer engagement . The UK ’ s leadership in Artificial Intelligence and green energy opens up modern markets for the SMEs . In embracing this technologically changing environment , SMEs become more resilient and competitive .
The role of mergers and acquisitions
While trade challenges remain very much in place under Brexit , undervaluation has presented unique opportunities within the UK mergers and acquisitions space . Experts predict increased activity as market confidence grows and stability returns . This presents an unrivalled opportunity for SMEs to scale operations , secure investment or seek out exit strategies .
Resilience and innovation for the future
The second half of the 2020s will hopefully be far less eventful globally than the first . That prospect can only help the economy – and , by consequence , company owners intending to capitalise on the work they have put into building up their businesses .
SMEs , which account for 99.9 % of UK businesses and employ over 16.7 million people , are the backbone of the economy . By embracing innovation , adapting to regulatory shifts and capitalising on available support , SMEs can navigate the challenges of 2025 while seizing the opportunities ahead .

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NOTABLY , SME INSOLVENCIES HAVE RISEN , WHICH TEND TO SHOW THEIR VULNERABILITY DURING PERIODS OF ECONOMIC UNCERTAINTY .

SIMON DANIELS , SALES DIRECTOR , KBS CORPORATE

Intelligent SME . tech
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